Entries Posted in Mail Processing & Transportation

Undeliverable as addressed (UAA) mail is a clunky name for a big problem: Mail not reaching its intended recipient because the address is incorrect, incomplete, or illegible. UAA mail is costly to both the Postal Service and its customers – about $1.5 billion a year for the Postal Service and $20 billion for the mailing industry, according to a report we issued last month.

But the costs of UAA go beyond just returning, destroying, or forwarding undeliverable mail. For mailers, there are direct costs, such as printing and postage, and indirect costs, such as lost opportunities. A direct mailer has no chance for a sale if the piece never reaches the customer. And an undeliverable invoice either slows down cash flow or, if the piece never reaches its intended recipient, results in no payment at all, as Pitney Bowes notes in a white paper. Furthermore, a company’s customer service costs can jump if irate customers call after getting a late fee for a bill delayed by an incorrect or incomplete address.

Then there is what some mailers call a customer relationship management (CRM) cost. Address software provider Melissa Data explains, “CRM costs reflect the damage to customer relationships that result from failed communication.” The CRM cost of UAA mail can be calculated a few ways, but the simplest might be to determine the customer’s annual value (say he or she spends $600 a year on a cable bill) and divide it by the customer’s expected response rate (for this cable company let’s say 5 percent). In this case, the CRM cost of a UAA mailpiece is $30.

Despite concerted efforts by the Postal Service and mailers to reduce UAA mail, it actually increased by 2.1 percent to a total of 6.6 billion pieces from fiscal years 2011 to 2014, our report notes. We found the Postal Service’s strategies to reduce UAA have been ineffective because of how complex the address verification process is and because mailers have to abide by conflicting laws and regulations. For example, companies in the financial and insurance industries are legally required to send mail to the last known address even if Postal Service systems indicate a change of address has been submitted.

Still, we expect certain Postal Service programs to help. The Postal Service has made it easier for recipients to change addresses online. And on the business mailer side, the Seamless Acceptance program, which relies on electronic documentation, should help by providing greater visibility into data associated with each mailpiece. The data will let the Postal Service associate UAA mail with the sender and provide opportunities to craft entirely new solutions to ensure address standards are met.

How does UAA mail affect your operations? What other ways could the Postal Service and industry reduce UAA mail? How do you price the lost opportunity of undeliverable mail?

With all those designer shoes, cutting-edge electronics, and trendy toys shipping into our homes via ecommerce, it’s only logical that sometimes the shoes won’t fit, the electronics won’t work, and the kids will have already moved on to the next hot toy.

The bottom line is that some of the stuff we buy needs to be returned. And that’s known as reverse logistics.

As the offspring of the enormous ecommerce business, domestic shipping returns currently generate about $3 billion annually in revenue for the package delivery industry, and could reach $4 billion by fiscal year 2016. Shipping returns’ first cousin, package forwarding, is also booming as customers increasingly expect more control over when and where their packages will be delivered.

This trend certainly isn’t lost on the industry. FedEx, for example, expanded its reverse logistics prowess with its $1.4 billion purchase of GENCO Distribution System Inc., a third-party logistic provider. And Britain’s Royal Mail is so interested in reverse logistics that it even did a study that profiled the types of people who frequently return online purchases. (Turns out there are four: the returns addict, the duplicate dealer, the bargain hunger, and the swap shopper.)

The U.S. Postal Service also is active in the returns and forwarding markets, and offers a variety of products and services, such as Parcel Returns Service, Bulk Parcel Return Service, and two Premium Forwarding Services – one for homes and one for businesses. Recently, the Postal Service has been promoting its built-in advantage over other providers – its 6-day-a-week delivery and its free package pick-up service.

But can it do more to get its chunk of the reverse logistics market? We think so. Our recent white paper on the topic found several services the Postal Service could offer to take advantage of its strengths. First, it could consider providing digital parcel labels to the growing crowd of smartphone users. With this technology, the customer notifies the merchant of a pending return, the merchant sends a quick response (QR) code to the customer’s phone, the customer then schedules a carrier pickup, and the carrier scans the QR code, prints a label from a handheld device, and takes the package.

Next, warehousing is a big piece of the logistics business as many small businesses lack space to house the products they ship to customers. We suggested the Postal Service put its excess facility space to good use by offering shipping and return services to businesses that have combined inventory storage and shipping needs.

Finally, the Postal Service could offer customers an alternative delivery option in which they could pick up purchases at any of the 32,000 post offices. This would appeal to those who want packages sent to a location of their choosing, rather than wait for the item at home or work.

Are you a frequent returner? What do you look for in returns service? What could the Postal Service do to ease the return or forwarding of goods?

Here’s the good news: Mailers accept and support the U.S. Postal Service’s Seamless Acceptance (SA) program. And here’s the bad news: Implementing the program hasn’t been very seamless.

Ongoing data integrity problems, among other concerns, have delayed full implementation of the program. We found evidence of inaccuracy in the data and mailers raised similar concerns, prompting them to ignore the data, according to our recent audit report.

Not the most auspicious start to a program designed to increase the efficiency of commercial mail entry, verification, and payment. Still, everyone involved wants the program to succeed. SA is expected to make mail acceptance faster and less complex, standardize the acceptance and verification process, and allow for a trend-based quality measurement system.

Seamless Acceptance uses electronic documentation from a commercial mailer, intelligent mail barcodes, and various scanning devices to verify that the letter and flat mail a mailer is entering meets the Postal Service’s acceptance thresholds and that proper postage is collected. Twenty-nine major mailers have volunteered to participate in SA, tendering about 1.7 billion mailpieces each month. Another 288 mailers volunteered to participate in a preparatory phase of the program known as Seamless Parallel, which helps introduce mailers to SA.

Our recent audit report noted that while the Postal Service has reported progress in implementing SA, delays continue due to ongoing data integrity issues, as well as customer service and communications hurdles. The Postal Service’s initial goal was to have the full SA program in place by last September. But a series of delays has pushed that date back to July 2015. Notably, problems remain with the scorecard data provided to mailers; postal staff members have limited access to relevant reports and data; and there is inconsistent communication between the Postal Service and participating mailers.

If you are a commercial mailer currently participating in SA, what are you seeing in terms of data quality, customer service, and communication? If you are not a current participant, are you interested in joining the SA program? If not, what is holding you back?

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